Some Rochester-area consumers, especially those served by low-cost municipal power utilities, may be in for a bit of sticker shock: The cost of electricity is up, in some cases by a lot.
The rise in residential electric prices — 20 percent to 30 percent or more over the last month or so — is due to a surge in use caused by bone-chilling cold weather, and by a concomitant spike in the price of natural gas.
Between one-third and h alf of the electricity consumed in the state is generated by burning natural gas, which recently hit a five-year high in price.
“It’s a pretty unique situation, and a lot of it is driven by the natural gas costs. They had to call on natural gas generators to meet demand, and the cost to produce that power was at an all-time high,” said Owen McIntee, superintendent of the Spencerport village electric utility. “Unfortunately, that trickles down, doesn’t it?”
People who heat their homes with natural gas face a double-whammy, of course.
Electric customers enrolled in a utility budget plan will pay more but the hit will be spread out over time. Those who opted for a fixed-rate plan, available from some independent suppliers, should avoid big problems.
Those who buy variable rate electricity without a budget plan are the ones who will feel it.
Residential customers served by Rochester Gas and Electric Corp. and New York State Electric and Gas Corp., both owned by Iberdrola SA, are not as bad off as others. Their average residential electric rates so far this month are 8 percent and 10 percent higher than January’s, respectively. They’ve risen 15 percent and 16 percent since December, according to information on the companies’ websites.
But customers of National Grid were warned several weeks ago that their electric costs could go up as much as 27 percent in the latest bills. The company reached a deal with New York state regulators that will allow it to spread those extra costs out over a number of months.
National Grid, the two Iberdrola companies and other investor-owned utilities in New York buy electricity and gas in the marketplace and pass it on to customers with no markup. The utilities make their money on delivery charges.
RG&E spokesman Dan Hucko said the state Public Service Commission had reviewed the Iberdrola companies’ pricing data and voiced no concerns about their increases.
Asked why the two companies’ rate increases are less than those of National Grid’s, he said the February prices were set at different times. “The prices are based on estimates of the c ost of acquiring energy and, if the estimates are off, can be ‘trued’ up or down in subsequent months,” Hucko said. David Flanagan, a spokesman for the New York Independent System Operator, which runs the state’s power grid, said consumers got a break last year when mild w inter weather kept natural gas prices low. That led to the lowest wholesale electricity costs in the 13 years since New York created competitive energy markets, he said.
By contrast, this cold winter of 2013-14 has created great demand for gas on the part of users who need it for heating and industrial purposes.
At the same time, the demand for electricity soared, with New York setting both one-day wintertime and January monthly records for electricity use. Expensive gas-fired power plants that don’t always run fulltilt were pressed into service, creating competition for natural gas and driving prices even higher.
“During extreme cold weather the higher demand for gas from both retail customers and power plants can drive up the market price,” Flanagan said. “The increased demand for gas, particularly in the Northeast, can also lead to constraints on the gas pipeline system, which also will increase the price and can reduce the availability of natural gas for generation plants.”
Among consumers, some of the worst off are customers of the smaller publicly owned utilities in the villages of Fairport, Spencerport, Churchv ille, Bergen and 39 other municipalities scattered around the state. The munis are given allotments of inexpensive hydroelectric power under a decades-old law, and their rates typically are lower than those of the investorowned utilities.
But the hydro allotments don’t meet all of the demand, and the municipal systems must buy supplemental electricity on the open market. And that’s proved to be very expensive.
Rates in Spencerport, which has 2,800 customers, are up by a third in the current bill, McIntee said. “Our January bills are going out in the next day or two,” he said on Thursday. “We’re going to see some problems.”
In Fairport, with 14,000 customers the largest municipal system in the area, the story’s similar.
“They’re just getting those bills now,” said Village Clerk-Treasurer Kay Wharmby. “We’ve sent a stuffer out with bills. So far, we’ve had a few questions but not a lot. We’re kind of expecting to be hit. We’re gearing up to handle it.”
Wharmby said people who use electricity to heat their homes will face “much bigger” increases. The village planned to spread its unusually high electricity purchase costs over several months’ time to cushion the blow to consumers.
The village of Hilton is not a utility and doesn’t receive any low-cost hydro power. But it functions as an independent supplier, buying electricity on the open market a nd passing it on to about 1,330 customers.
The low-overhead arrangement, unique in New York state, usually results in prices that are below those charged by investor-owned utilities, said village manager Shari Pearce.
Not this winter, though. A month’s worth of electricity, normally $100,000, cost $260,000 last month, she said.
Customers who opted for Hilton’s fixed-rate electricity are sitting pretty, though the village electric system is losing money to meet their demand.
The customers who have variable rate billing, though, are paying three times what they usually do. “Then add on the coldness, too — the consumption is way up,” Pearce said. “It’s really going to be a hardship.”
“During extreme cold weather the higher demand for gas from both retail customer s and power plants can drive up the market price.”